Bonding bill gains support
ST. PAUL -- Minnesota already makes larger payments on its loans than state officials want, but many lawmakers propose borrowing still more money.
And if a federal stimulus package includes money for state infrastructure, the pressure to borrow to fund public works projects will grow more.
As legislators get ready for their 2009 legislative session, there is a division about whether to pass a "bonding bill" to build and repair state buildings, roads and other infrastructure. Those supporting one say it would provide much-needed jobs during a recession unlike any the state has seen for decades.
Rep. Doug Magnus of Slayton is the rare Republican promoting a massive public works program, saying the state needs something like the federal Works Progress Administration that employed thousands of Minnesotans in the 1930s.
"A major initiative for a public works-type of a program is one area that we could put a lot of people to work," he said.
Magnus hopes money comes from Washington like it did for the WPA.
The state cannot afford to foot the entire bill, Magnus added, but "we certainly can be a partner in it."
The catch is that the state already has a bigger loan-repayment bill than its rules allow.
A long-standing rule - not a law - requires that no more than 3 percent of the state budget be used to repay interest on loans. Even if lawmakers do not approve more borrowing in 2009, the state exceeds that 3 percent figure.
Some say that means the state cannot launch a public works program. Others say that the jobs are so critical the state must break its own rule.
The Legislature's top public works expert, Sen. Keith Langseth, DFL-Glyndon, said lawmakers "can do what we decide to do."
Advisers say the state should not be in danger of hurting its credit rating if its interest payments top 3 percent, Langseth said.
"We probably will wait and see what the federal government does," he added.
President-elect Barack Obama and many members of Congress want a federal stimulus package that includes money for states to launch construction projects such as wind farms and roads.
Langseth and Senate Majority Leader Larry Pogemiller, DFL-Minneapolis, said they will not let federal money slip away.
"There is going to be something in the way of bonding, some kind of stimulus there," Langseth promised.
The University of Minnesota system alone has $35 million in building preservation needs awaiting funding.
"This is the time to do a fix-up," Langseth said. "Really, you should be doing more of the bonding and building in hard times."
However, it is too early to predict what might be in a bonding bill.
A Republican member of the House bonding committee doesn't see eye to eye with Langseth.
"I don't see how we can do a bonding bill this year," Rep. Morrie Lanning of Moorhead said.
Getting federal money "is a pretty big 'if,'" he said. Besides that, he added, the federal government cannot afford to spend as much money as Obama would like.
"Some people are kind of licking their chops (hoping) a boatload of money is coming to the states," Lanning said. "I don't know how the federal government can continue to do that without creating more problems with the national economy."
However, Lanning left the door open to federal money: "If, in fact, that were to happen and we have an opportunity to make an investment, then we certainly should take a look at that."
An important variable in the budget debate will be the impact of a possible federal economic stimulus package pushed by the incoming Obama administration, Rep. Larry Howes, R-Walker, said.
If such a proposal helps to speed up states' planned public works projects, it could soften the Minnesota budget deficit and improve the state's job outlook.
"Will that change our picture?" Howes wondered of feds' action.